Many people, when selling their first company, opt to go it alone. By doing so, they can miss out on value they might not even know about by navigating this process as a novice. Don’t make that mistake.
If you’ve never sold a business before, it might not seem like you get that much from an M&A advisor. They’re not miracle workers, after all. They can’t transform your company, and they cost money. As many owners rightly point out, you don’t have to hire an advisor, and can still technically make a profit without one. The issue is that you’ll never know how much money you left on the table by virtue of not recruiting outside expert help. Moreover, the process will almost certainly be more stressful without a broker on your side. You’ll be left wondering whether the sale value is fair, and be forced to navigate the entire transaction on your own. In most cases, you’ll be up against a veteran team on the buyer’s side. This makes for an inherently uneven negotiation table.
Here are some other reasons you need to hire an M&A Advisor:
- They can help create a competitive bidding process, even when you only have one buyer. They create the illusion of another offer, and when a buyer senses scarcity, they often become willing to pay more. If the buyer knows you don’t have a second offer, the banker still lends credibility to the process, showing that you’re seriously committed. They can remind the buyer that you are likely to get another offer, driving the price up and shortening the timeline to closing.
- They let you be the good guy by acting as the bad cop. This helps you get a better price. They negotiate with the acquirer, putting pressure on them, but the acquirer doesn’t punish you. This drives the price higher, and alleviates much of the stress associated with the negotiation process.
- They free your time. You can’t simultaneously run a business and negotiate a deal. Those are two full-time jobs in their own right. Sooner or later, one of them will suffer. When an advisor handles the negotiations and some aspects of deal-making, you can focus on running your business. This ensures your business is performing as well as possible during the deal-making process, ensuring you get the best possible price.
- They make the sale process better. Adding an advisor into the recipe for the process lends credibility to the process. CFOs, corporate development experts, lending officers, and other outsiders take you more seriously when you work with a professional. This is because they know that the buyer can no longer control the process, and that the advisor’s expertise will guide your expectations.
There’s no downside to hiring an M&A advisor. Research consistently shows that sellers get higher asking prices and better deal terms with a banker. Deals are less likely to fail, and integration is more likely to succeed. So spend the time you would spend marketing your business researching bankers, then invest in the future of the sale by investing in a savvy advisor.